WHEREAS it is provided by Article 40 of the Constitution of the Federal Democratic Republic of Ethiopia that land is the property of the State and the people of Ethiopia and that its use shall be subject to specific regulation by law;

WHEREAS the sustained rapid economic growth registered across sectors and regions in the country has steadily and exponentially increased the demand for urban land, and such development requires prudent and responsive land resources management;

WHEREAS the prevalence of good governance is a foundational institutional requisite for the development of an efficient, effective, equitable and well functioning land and landed property market, the sustenance of a robust free market economy and for building transparent and accountable land administration system that ensures the rights and obligations of the lessor and the lessee;

NOW, THEREFORE, in accordance with sub-article 2(a) of Article 55 of the Constitution of the Federal Democratic Republic of Ethiopia, it is herby proclaimed as follows:

1. Short Title

This Proclamation may be cited as the “Urban Lands Lease Holding Proclamation No.721/2004

2. Definitions

In this Proclamation unless the context otherwise requires:

1/ “lease” means a system of land tenure by which the use right of urban land is acquired under a contract of a definite period;

2/ “urban land” means land located within an administrative boundary of an urban center;

3/ “urban center” means any locality having a municipal administration or a population size of 2000 or more inhabitants of which at least 50% of its labor force is, primarily, engaged in non-agricultural activities;

4/ “region” means any state referred to under Article 47(1) of the Constitution of the Federal Democratic Republic of Ethiopia;

6/ “appropriate body” means a body of a region or a city administration vested with the power to administer and develop urban land;

7/ “public interest” means the use of land defined as such by the decision of the appropriate body in conformity with urban plan in order to ensure the interest of the people to acquire direct or indirect benefits from the use of the land and to consolidate sustainable socio-economic development;

8/ “urban plan” means structural plan, local development plan or basic plan of an urban center including annexed descriptive documents which are legally endorsed by the authorized body and have legally binding effect;

9/ “tender” means a modality of land use right transfer applied for providing urban land on lease to the highest bidder on the basis of market and competitive parameters;

10/ “allotment” means a modality of land use right transfer applied for providing urban lands by lease to institutions that could not be accommodated by way of tender;

11/ “lease benchmark price” means the threshold price determined by taking into account the cost of infrastructural development, demolition cost as well as compensation to be paid to displaced persons in case of built up areas, and other relevant factors;

12/ “grace period” means a time frame that a lessee is relieved from payment after effecting the advance payment and before the commencement of the annual lease payment;

13/ “construction start-up” means the construction of at least the foundation and erection of re-enforcement bars to cast columns of the planned construction;

14/ “completion of foundation” means the construction phase whereby the building site is dug, reinforcement concrete is filled in and its floor is completed and erection of its first wall is started;

15/ “half-completion of construction” means:

a) in the case of a villa, completion of foundation, columns and top beam;

b) in the case of a multi-story building, completion of foundation and 50% of the total number of floor slabs;

c) in the case of a real estate development, completion of the construction phase referred to, as the case may be, in paragraph (a) or (b) of sub-article (1) of this Article relating to the entire blocks.

16/ “completion of construction” means the full completion of a building and installation of basic utilities in accordance with the plan and make it ready for use;

17/ “old possession” means a plot of land legally acquired before the urban center entered into the leasehold system or a land provided as compensation in kind to persons evicted from old settlements;

18/ “manufacturing industry premise” means plots of land reserved, developed or allotted, in accordance with the land use plan, for use of manufacturing industries;

19/ “mega real estate” means a housing development involving the construction of at least 1,000 residential units with a view to alleviating the shortage of housing in urban centers;

20/ “projects having especial national significance” means projects having outstanding contributions in the success of the country’s growth and transformation, or projects which, in the course of expanding the country’s cooperative relations with other governments, are intended to lay strong foundation for the relations between the countries;

21/ “Ministry” means the Ministry of Urban Development and Construction;